Rep. Scott Murphy, D-N.Y., on Friday declared he would vote for the administration’s $940 billion overhaul of the nation’s health care system, saying it would shift the balance of power from insurance companies to patients and does a better job of reining in medical costs.

In an interview with the Albany Times Union, Murphy said the final health care package is “much more fiscally conservative” than the broader House-passed bill he opposed last November and would do a better job of reducing the explosive growth in medical costs that “our families and small businesses are facing,” while still expanding insurance coverage to roughly 32 million more people.

“This bill is fundamentally different than the bill we voted on last November,” Murphy said, adding that while the measure “is not perfect,” he feels “much better” about it.

Murphy’s decision ends days of intense speculation about how he would handle the issue, which is a signature piece of President Obama’s domestic agenda and is a top priority for congressional Democrats.

Widely viewed as a potential swing vote, Murphy has been a top target for lobbying in the nation’s capital — including a half-hour White House meeting with Obama last week and a brief discussion on the House floor with House Speaker Nancy Pelosi on Friday. He also has been the subject of a fierce PR campaign in his mostly rural, upstate congressional district.

Ultimately, after studying the Democrats’ 2,000-page-plus final health care bill and spending months discussing the issue with constituents, health care experts and colleagues on Capitol Hill, Murphy said he decided that it was “going to make the system better than what we have now.”

“The bill we (voted on) last year didn’t do that,” Murphy added.

Murphy said he “had to look at the whole big picture,” and assess whether the bill would “help with the budget crisis we’ve got” and “help our small businesses be more competitive.”

Murphy cheered a series of changes embodied in the final health care package, including:

a broader distribution of tax liability for medical devices so the taxes would apply to foreign suppliers, as well as domestic manufacturers that are prevalent in New York’s 20th congressional district. Medical products that cost less than $100 also are expected to be excluded from the medical devices tax, under a deal that will be included in a manager’s amendment offered during floor debate this weekend. Murphy had been pushing for that change in discussions with Obama and Pelosi.

“a much more aggressive approach” to slashing Medicare waste and fraud. For instance, the new bill removes some legal barriers to investigating and prosecuting Medicare fraud. It also would boost penalties for anyone submitting false Medicare payment claims and creates a new database for tracking fraud across federal and state programs.

less “onerous” provisions on small businesses, including limitations on a provision requiring employers of more than 50 workers to offer insurance or face fines of $2,000 per full-time worker. Murphy said he was pleased by the 50-worker threshold, as well as new tax credits for smaller businesses that offer insurance anyway. And, Murphy said he was encouraged that businesses would be able to pool together to buy insurance coverage in new exchanges that would be created by the legislation.

Murphy also applauded the overhaul’s final price tag, and the expectation that it would pare $138 billion in federal deficits over the next decade, based on a preliminary analysis by the non-partisan Congressional Budget Office.

“This legislation will not only make coverage more affordable for New York families, but it will also reduce the federal deficit,” Murphy said. This is “the most important piece of deficit reduction work that’s been done here in a decade.”

Murphy’s decision could cost him support among conservatives in his district, which has until recently been a GOP stronghold and where Republicans have an enrollment advantage.

But it was cheered by liberal activists who have been imploring Murphy to support the legislation.

“We are so glad to see him come around and do the fiscally responsible thing with a bill that’s going to drive the deficit down, . . . really prioritize patients over insurance companies and really help out small businesses,” said Chris Scoville, capital district organizer for Citizen Action. “The majority of his district will be very pleased.”

In canvassing constituents, meeting with officials at New York hospitals and conducting listening tours of local businesses, Murphy said he repeatedly heard people say that the current system was not sustainable and that something had to be done about “skyrocketing health care costs.”

Small business owners and families “all are struggling with rising health care costs,” Murphy said, noting that he recently spoke with a Glens Falls, N.Y. dry cleaning operator who was facing a 26 percent increase in his insurance premiums. That is “just intolerable,” Murphy said.

People “are frustrated” with the current system and “don’t feel they have control of their health care” decisions, including what doctors to see and what medical procedures are an option, Murphy said. Right now, he added, the “balance of power” is on the insurance companies’ side.

“That’s a critical aspect of this reform,” Murphy said. “We are changing that dynamic” and providing “more power for the doctors and patients to decide” what is best.

Murphy remained disappointed that the legislation did not include broader changes in the way medical liability lawsuits are handled.

“It doesn’t do nearly enough on tort reform,” Murphy said, adding that he believes doctors practice too much “defensive medicine” to protect against lawsuits. That drives up costs for everyone, Murphy said.

Update: Sen. Kirsten Gillibrand, D-N.Y., — Murphy’s predecessor in the House — just issued a statement praising his decision:

“I was proud to campaign hard for Scott Murphy because I knew he would do what was right in Washington and always put upstate New York families first. Today, Scott has put families and small businesses in Upstate New York ahead of insurance companies, by announcing his support for fiscally responsible health care reform. From making prescription drugs more affordable for upstate seniors, to providing tax credits for small businesses to afford better coverage for their workers, to cracking down on Medicare waste, fraud and abuse to ending the worst insurance practices that hurt patients when they need help the most, this legislation will improve life for upstate New York families.”

Continue reading after the jump for Murphy’s complete written statement explaining his decision and more reaction from local activists.

Below is Murphy’s complete statement explaining his decision:

“Last November, I voted against the House health care reform legislation because I did not believe it adequately addressed the fundamentally flawed system that has led to skyrocketing health care costs, bankrupt families, and excessive profits for insurance companies. In the months since that vote, I have worked closely with my constituents, my colleagues in Congress, and with President Obama to address many of these concerns and ultimately strengthen this legislation.”

“From the beginning, I have said that I support meaningful health care reform that is fiscally responsible and stops the out of control growth of health care costs. This legislation will not only make coverage more affordable for New York families, but it will also reduce the federal deficit by $138 billion in the first ten years and $1.2 trillion over the next ten.”

“Furthermore, this bill is serious about slowing the out of control growth of health care costs that are devastating our families and small businesses. I am pleased that the final legislation reflects many of my recommendations to encourage individuals to make healthy choices, reward doctors based on quality outcomes, and combat Medicare fraud and abuse. By simply implementing several common sense policies, we can slow the rising costs of health care for New York families.”

“As a small businessman, I am also keenly aware of the impact rising health care costs have on small businesses and New York’s economy. The bill before us makes significant improvements over the House-passed legislation by eliminating the employer mandate for small businesses, providing meaningful tax incentives, as well as creating heath care exchanges that allow businesses to band together to negotiate better prices from insurance companies. On a local level, I fought to ensure that several of our largest employers—paper mills and medical device manufacturers—are treated fairly under this legislation. These reforms will ensure that our local businesses can continue to provide quality coverage while creating jobs and driving economic growth.”

“Over the last year, I have held more than 100 district events to ensure an open and honest discussion about health care reform. I have listened very carefully to the diverse views of our district. Yet despite all of our differences, we remain united in the basic belief that our current health care system can be improved. This legislation takes health care choices out of the hands of insurance companies and puts them back in the hands of families and doctors. These reforms will ensure that insurance companies are prohibited from the practices of excluding those with pre-existing conditions, capping benefits, and discontinuing coverage when people get sick.”

“Lastly, to put this in very personal terms, I’m here today in Washington with my son Duke, who is 4. This year, our nation will spend over $2.6 trillion on health care, up from $2.3 trillion last year, and the rate of spending is only increasing. If we do not act to rein in this out of control system, by the time he graduates high school we will be spending over $7 trillion a year on health care. For these reasons, I intend to vote yes on the President’s health care reform legislation.”

“Congressman Murphy has now shown that he is a fighter for the people of the 20th congressional district. If this bill passes, almost 30,000 uninsured people in this district will have access to health care coverage. 15,500 small businesses in the district will receive tax credits to help pay for insurance for their employees. Congressman Murphy has chosen to be on the side of the people of New York and America by siding with us, instead of siding with big insurance. With this meaningful reform, America will have moved one giant step in the right direction toward creating a society, and a government, that puts people first. Now, it’s time for all of New York’s representatives in Congress to do the right thing and vote for this bill.”

Al Ormsby, a resident of Murphy’s district and a member of the Saratoga Democratic Committee also cheered Murphy’s move:

“I’m proud that my congressman, Scott Murphy, is going to vote in favor of health care reform. After decades of hard work, we’re on the verge of winning health care reform that will improve coverage for 459,000 residents of the 20th congressional district. Congressman Murphy is supporting legislation that helps contain health care costs and puts people and small businesses before insurance company profits. Congress must now pass this bill and finish reform.”

Jennifer A. Dlouhy covers energy policy, politics and other issues for The Houston Chronicle and other Hearst Newspapers from Washington, D.C. Previously, she reported on legal affairs for Congressional Quarterly. She also has worked at The Beaumont Enterprise, The San Antonio Express-News and other newspapers. Jennifer enjoys cooking, gardening and hiking. She lives in Washington, D.C., with her husband and toddler son.

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